Human service nonprofits have experienced substantial fiscal stress in recent years due to the fiscal crisis and greater competition for public and private resources. Nonprofit executives and board members report using a broad range of strategies to buffer the dynamism they currently face in the funding markets. (Harrison, 2011; Hasenfeld 2009, 2013). Of interest in this study is whether there are patterns in the selection of resilience strategies that are shaped by market structure and market position. Strategic management scholars contend that market structure impacts strategy (Porter, 1991; Oster, 1995). Yet, the present state of knowledge about this relationship in the nonprofit sector is rudimentary at best.

 Objective: The objective of the present study is to examine the patterns of adoption of a broad set of resilience strategies-that range in financial risk and program disruption- in response to fiscal stress, with an eye towards discerning whether and how strategy adoption varies by market structure and position. These strategies include but are not limited to: increasing efforts to cultivate individual donors, increasing investments in earned income strategies to yield a higher return, increasing program fees, drawing on reserves, borrowing funds, reducing the number of people served and increasing partnerships and collaborations.

Data collection/extraction methods: Data are compiled from IRS 990 tax forms in over 300 cities across several subareas in the human services field between 1990 to 2011.

Study design: The study combines organization, city and state-level data in a longitudinal, multilevel model to examine how the structure of the local operational market (monopolistic, oligopolistic, or competitive) and the nonprofit’s position within that market (leader, minor contender, emerging player, niche player) factor in to differentiating the various approaches a nonprofit will choose to adopt to buffer financial shocks in the short-run.  

Hypotheses: Hypotheses are developed that draw on industrial organization and organization ecology theories. Among other things, it is expected that market leaders in competitive markets will be more likely to adopt strategies that are less disruptive to programs and leave them less financially vulnerable than organizations occupying other market positions because they can draw on reputational capital. It is also hypothesized that niche players, because of their agility, will be more likely to adopt resilience practices that actually enhance their position by engaging in partnerships, enhancing volunteer capacity and increasing investment in earned income strategies.

Implications: The sustainability challenges nonprofits face are of real significance to policymakers and public and nonprofit managers. Government is reliant on the nonprofit sector to produce and deliver human services and has been instrumental in the restructuring of the human services sector over the past decade (Lecy & VanSlyke, 2013). If strategies to build resilience in the face of fiscal stress are limited for some organizations by the nature of the newly restructured market they operate in, it will help us better understand the consequences of the current government-nonprofit relationship.